Farmers left sour over 'cutthroat' milk war

By Georgina Mitchell and Sally Willoughby

Brian Wilson, a fourth-generation cattle farmer with a property near Tamworth, says the Coles and Woolworths duopoly cut his income by about $80,000 last financial year.

For Mr Wilson, the Australian Competition and Consumer Commission's stepped-up investigation of the duopoly's power over suppliers can't come soon enough.

Lost $80,000 in income ... Brian Wilson welcomed the Australian Competition and Consumer Commission's investigation.Credit:Barry Smith

Mr Wilson said producers in the New England went through a competitive tender process to win the Coles and Woolworths milk contract but many farmers were forced to sell their product at a loss.

Mr Wilson said $1-a-litre milk offered by Coles and Woolworths had a drastic effect on his Tamworth farm and other farms in the region.

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''The last financial year, we were probably down $80,000 on our milk income,'' he said. ''The processors can't talk with each other to keep their prices up, so it becomes very cutthroat … They get the contract but it's good news and bad news because they have to go so low to get it.''

But for some, the pressures of the system means the investigation comes too late.

The chief executive of the NSW Farmers Association, Matt Brand, said 30 farming families in the state had left the dairy industry in the past year because of price cutting by supermarket chains.

He said the market dominance of large retailers, which adversely impacted returns to farmers and processors, had been a concern for years.

''We just want to see these guys getting a fair return for a solid day's work,'' Mr Brand said.

The ACCC announced last week it would investigate the supermarkets over claims they bullied suppliers, misused market powers and potentially breached the law.

Fifty producers anonymously stepped forward with evidence against the supermarket giants, who last year earned a combined revenue of $70 billion.

Mr Brand said some sort of resolution needed to be reached.

''The reality is supermarkets aren't going anywhere and neither is agriculture and we need to all be able to sit down and have a serious look at supply chain solutions,'' he said.

He said the association supported the investigation, particularly the ACCC's promise to protect the identity of those who spoke up.

But Mr Wilson said producers had lost control of the dairy industry and he wasn't sure if they could gain it back.

Both supermarkets said they would co-operate with the ACCC investigation.

A spokesman from Coles said the supermarket absorbed the cost of low-price milk by reducing its own profits and it compensated dairy processing companies who bought the milk from farmers.